Keurig Green Mountain and Dr Pepper Snapple Group Inc. (NYSE:DPS) have announced that they are merging. This will result in a beverage giant with annual revenues estimated to exceed $11 billion. The deal will combine some of the best known names in the juice and soft drinks sector including Hawaiian Punch, Sunkist, Mott’s, A&W, Snapple, 7UP and Dr pepper with the single-serve coffee systems of Keurig and Green Mountain Coffee Roasters. Also included are over 75 brands associated with Keurig.
The new entity will be known as Keurig Dr Pepper (KDP). Keurig Green Mountain and Dr Pepper Snapple Group are hoping that by merging, they will enjoy enhanced marketplace leverage.
“KDP will be a total beverage solution that provides options across all consumer needs and occasions, whether they are at work, at play or on the go. The combined organization will unlock opportunities for growth across the entire beverage space,” the chief executive officer of Dr Pepper Snapple, Larry Young, said.
The terms of the deal will see shareholders of Dr Pepper Snapple get a cash payment of approximately $18.7 billion. On a per-share basis shareholders of Dr Pepper Snapple will be entitled to a special cash dividend of $103.75. They will also own a 13% stake in Keurig Dr Pepper. JAB Holding, a privately-held firm based headquartered in Luxembourg, owns Keurig Green Mountain after acquiring it in 2016.
The Luxembourg-headquartered firm will be Keurig Dr Pepper’s be the controlling shareholder as it will have an 87% stake. Shares of Keurig Dr Pepper will be listed on the NYSE.The new entity will be headed by Robert Gamgort, the chief executive officer of Keurig Green Mountain. There will be no change with regards to the corporate headquarters of the two companies. Keurig Green Mountain will still be based in Waterbury, Vermont while Dr Pepper Snapple will still operate from Plano, Texas.
According to Gamgort the two entities will complement each other once the merger is concluded. Keurig Green Mountain for instance boasts of a strong traditional retail distribution capability while Snapple has a multichannel distribution system. There will also be cost savings to be generated from the merger.